Overview of the 2021 White Paper on Information andCommunications
Economics Research Office, ICT Strategy Policy Division
Information and Communications Bureau
Ministry of Internal Affairs and Communications
In this white paper, the special theme of Part 1 is “Livelihoodand Economy Supported by Digital Technologies,” reflecting
on Japan’s efforts toward digitalization, as well as the present
situation and challenges of digital utilization in daily life, incorporate activities, and in the public sector. It also examines thechanges caused by digitalization accelerated by the COVID-19
pandemic. The white paper reports that it is necessary to improvethe digital utilization capabilities of the people and to promote
digital transformation in the private and the public sectors
strategically and seamlessly in order to realize a resilient societythat is capable of dealing with infectious diseases and natural
disasters. The white paper states that these initiatives entail theestablishment of common platforms for the digital society. Inaddition, Part 2 provides the latest data on the current state of
information and communications in Japan, as well as the policy
trends centered on the efforts of the Ministry of Internal Affairsand Communications (MIC). This article provides an overview ofPart 1.

1. History of digitalization in Japan(1) History of Japan’s digitalization policies
Since the enactment of the Basic Act on the Formation of an
Advanced Information and Telecommunications Network Society
in 2000, Japan has been promoting digitalization by laying down
various national strategies including the e-Japan Strategy in 2001.
The white paper highlights the goals and key initiatives of thenational strategies, dividing them into four phases; namely, thefirst phase of development of ICT infrastructure, the second phaseof promotion of ICT utilization, the third phase of promotion ofdigital data utilization, and the fourth phase of aiming to build adigital society.
(2) Progress of digitalization of Japanese society
The state of the uptake of ICT infrastructures in terms of
fixed-line communications shows that the number of FTTH
subscribers has increased rapidly since the late 2000s, and theratio of households with access to ultra-high-speed broadband hasreached 99.98 percent in 2015. The shift to broadband in mobile
communications has also continued, with more mobile devices
connecting to the Internet than PCs in 2010, and the ratio ofhouseholds with smartphones reaching more than 80% in 2019.
According to the OECD, the ratio of optical fiber for fixed-line
broadband in Japan ranked second in 2020, and mobile broadband
penetration ranked first in 2019.
Japan’s use of ICT infrastructure is progressing to a certain
degree, as shown by the scale of the e-commerce (BtoC) market
for daily life reaching approximately 19.4 trillion yen in 2019.

Meanwhile, in corporate activities, ICT investments have beensluggish, reaching only around 15.8 trillion yen in 2018. Thiscontrasts with the continually increasing ICT investments in theU.S. There is also a shortage in ICT personnel of about 220,000
as of 2018, and it is estimated that there will be further shortages
in the future.
(3) Digitalization of Japan as measured by internationalindicators
As to Japan’s global position in digitalization, for example, inthe digital competitiveness ranking by the International Institutefor Management Development (IMD), Japan ranked 27th
among 63 countries in 2020. In particular, Japan scored low in“international experience” and “digital/technological skills” for“talent,” and in “opportunities and threats,” “ agility of companies,”and “use of big data and analytics” for “business agility.”

2. Current situation and challenges ofdigitalization(1) C urrent state and challenges of digital utilization in dailylife
In a survey conducted by MIC among the general public,
when asked about the Internet services they normally use,
many respondents replied that they particularly use “Internetshopping” and “payment and settlement (through credit cards,etc.)” (Figure 1). In addition, when asked about the reason for theslow progress of digitalization in society, most of the respondents
pointed out “anxiety about information security and privacybreaches” (52%) and “lack of literacy among users” (44%).
Moreover, according to the Cabinet Off ice (2020)“Public Opinion Survey on Utilization of Information andCommunication Devices,” smartphone and tablet usage isparticularly low among people in their seventies or older (“notusing” is 50%). The top reasons cited were “not necessary forliving life” (52%), “not knowing how to use” (42%), and “relying
instead on family members” (40%). There is a need for initiatives
to support the use of digital technology so that older people are notleft behind by the digital society.

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■ Figure 1: Internet services for daily use(2) C urrent state and challenges of digital transformation ofcorporate activities
In Japan, ICT has contributed to improving productivity amid
the decline of the productive-age population. However, the impactof ICT’s contribution to improving productivity is not sufficientdue to the low amount of ICT investments and their being mostly
aimed at improving operational efficiency. Compared with theU.S., Japan’s labor productivity remained at about 60% as of 2019.
The COVID-19 pandemic has prompted the acceleration ofdigitalization on a global scale, leading to changes in consumption
behavior, digital disruptions that force existing companies to exit
the market as digital companies enter, and acceleration of the■ Figure 2: Efforts for digital transformation (Japan)

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globalization of the digital market. For companies to survive, theymust use digital technologies to develop new products, services,and business models, and to transform their organizations,
corporate culture, and workstyles. In other words, they needto carry out “digital transformation (DX)” to create new addedvalues.
In a survey conducted by MIC among company workers
on the status of DX efforts in Japan, about 60% of companies
responded that they have “not implemented, and no future plans”
for DX. Detailed results show that DX initiatives are progressing
in some industries (Figure 2). In addition, while many of theresponses of companies in Japan cited “operational efficiency andcost reduction” (45%) as the purpose for implementing DX, manyof the responses in the U.S. and Germany pointed to “creationof new products and services” and “improvement of customer
satisfaction,” which are the primary objectives of DX. Regarding
DX issues, Japan had a significantly higher number of responses
pointing to “shortage of human resources” (53%) compared with
the U.S. and Germany. In addition to the lack in quantity andquality of ICT human resources, another problem in Japan is that
ICT human resources are skewed towards ICT companies rather
than user companies.
(3) Current state and challenges of digitalization in thepublic sector
Since the formulation of the e-Japan Strategy, Japan has
taken steps to bring administrative procedures online, toreform government information systems, and to strengthen
IT governance. It has achieved a certain degree of success in
improving the efficiency of internal government organizations andin establishing systems and infrastructures. This is exemplified
by efforts to reduce the operating costs of information systems
through the implementation of the individual Number systemand the establishment of systems to accelerate the distribution
and utilization of administrative data. Even during theCOVID-19 pandemic, the government has also made good useof the “Mynaportal” for processing applications for special cash
payments. On the other hand, the complexity of the proceduresfor the administrative services that are provided to the public andbusiness operators remains an issue that needs to be addressed.
There is also a need for further dissemination of the use of

the individual number card. Residents are, therefore, not fully
enjoying the benefits of the use of digital technology.
As shown by the advanced digital government initiatives
overseas, many countries now have systems that enable carryingout various procedures on government portal sites. Denmark has
implemented thoroughly designed user-centric services, while
the U.K. has been working to improve services through agile
development on the basis of feedback from the citizens. South
Korea has required the use of a common standard framework forgovernment services and plans to deploy the framework overseas,
while the U.S. is actively promoting the introduction of cloudamong government agencies. Further, establishment of baseregistries is being promoted in the EU and other countries.
In March 2020, Japan compiled a “Grand Design forRealizing Digital Government,” presenting the directions ofefforts to be taken towards the realization of administrative
services in 2030 along four pillars (Figure 3).

3. Acceleration of digitalization brought about
by the COVID-19 pandemic(1) E xpansion of digital utilization during the COVID-19
pandemic
During the COVID-19 pandemic, “nesting consumption”
has grown, and households using Internet shopping have been
increasing rapidly since March 2020. Also, the usage rate of paid
video streaming services has increased more than the previousyears in 2020.
In addition to the expansion of online consumption, Internet
traffic is also dramatically increasing due to telework and remote■ Figure 3: T he four pillars shown in the Grand DesignSource: M aterials of the Liaison Committee of the CIO of each Ministry and Office on March 31, 2020
*This is a tentative translation by our office.

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classes. On average, Internet traffic has been increasing by around
20% annually, but it increased by more than 50% in 2020.
(2) D igital utilization in the public sector during theCOVID-19 pandemic
In Japan, the national and local governments have
implemented various efforts using digital technologies toprovide prompt economic assistance to citizens and to monitor
the status of infections and risks in the regions. These efforts
have largely been considered as the result of the development ofdigital infrastructures for national and local governments andhave been hailed as landmark use cases in the introduction of
new development methods. However, they have also led to themanifestation of problems related to the restrictions imposedby systems, rules, and customs, as well as issues related toprocurement and project management.
Governments overseas have also resorted to the use of digitaltechnologies during the COVID-19 pandemic. In Denmark,systems have been put in place to enable completing the processingof cash benefits online and for real-time monitoring of patientnumbers. In Korea, the government implemented prompt payment
of benefits through partnerships with credit card companies andshared the status of infections in real-time. Taiwan established a
name-based mask-rationing system and made the stock status of
medicines in pharmacies available as open data.

(3) Changes in corporate activities during the COVID-19
pandemic
While Japan’s corporate activities declined significantly inthe second quarter (April-June period) of 2020, the degree ofthe decline and the status of recovery vary by industry. In themanufacturing sector, industries are recovering due to the recovery
in exports to the U.S. and China. In the non-manufacturingsector, retail and telecommunications have exhibited strong
performance due to the rise in Internet shopping and thedigitalization of companies; but face-to-face industries have beensluggish. Among the listed companies, GAFA and other “techcompanies” in the U.S. are seeing increased overall performance,and ICT-related industries in both Japan and the U.S. areexhibiting significant gains in their market capitalization.
Moreover, although Japan has manifested a certain level ofentrenchment of telework, which is the typical example of thechanges in corporate activities during the COVID-19 pandemic,
its implementation rate differs depending on the industry, region,and size of the company. Also, the rate of telework implementationrose during the state of emergency but declined after it was lifted.
A recent survey by MIC aimed at the general public pointed tothe ease of taking time for self and family as a particular benefit oftelework (Figure 4). As to the challenges and barriers for telework,
many respondents particularly pointed out the unsuitability of thenature of their job and company systems to telework (Figure 5). It■ Figure 4: Advantages of telework■ Figure 5: C hallenges and barriers for telework (upper ranking choices)20

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is important to view telework as a means to realize the vision being
aimed at, rather than making the implementation of telework itself
as the ends.
(4) I ssues that emerged from the use of digital technologies
during the COVID-19 pandemic
With the rapid digitalization of the entire society during
the COVID-19 pandemic, various challenges toward therealization of a digital society have emerged. Regarding security
risks, according to the Information-technology Promotion
Agency (IPA) “Top 10 Threats to Information Security 2021,”
attacks targeting telework and other activities ranked newfor organizations, and threats to online payments and othertransactions ranked as the top threats for individuals. Improving
the literacy of users is also important in dealing with these security
risks.

4. Toward the realization of digitaltransformation that “leaves no one behind”
Going forward, Japan needs to build a society with a strong

resilience to deal with infectious diseases and natural disasters. Itneeds to build a sustainable society that addresses issues—such as
the shrinkage of the working population and the domestic market
due to the declining and aging population and the reduction
in digital competitiveness due to the changes in the industrial
structure brought about by global digitalization—by increasing
productivity and creating new added values. Also, it needs to build
a society that can offer a diverse, rather than a one-size-fits-all,form of happiness, leaving no one behind.
To this end, initiatives to encourage users (the public) to use
digital technology (eliminating the digital divide, improving
digital literacy, and improving UI/UX), digital transformation(data distribution and collaboration, securing and developing
digital human resources, shift to open and cloud-based
systems, and work-style reform) of suppliers (private companies
and the public sector), and construction of common platforms(establishment of advanced information and communications
infrastructures, establishment of base registry, and ensuring safety
and security) must be promoted strategically and in a seamlessmanner.(Figure 6).

■ Figure 6: Digital transformation that “leaves no one behind” should be tackled strategically andin a seamless manner*UI stands for “user interface” and UX for “user experience.”*Words written in red are future policy challenges.

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